Spain Inflation

Inflation stabilizes in June

Latest reading: Harmonized consumer prices were up 3.6% on a year-on-year basis in June, stable from the prior month's reading and coming in below market expectations. Relative to the prior month's figures, there were higher price pressures for housing and utilities (+4.7% on a year-on-year basis vs +1.3% in May) and restaurants and hotels (+5.3% vs +5.0% in May). In contrast, there were milder price pressures for food and non-alcoholic beverages (+1.9% vs +2.2% in May), transportation (+5.3% vs +8.0% in May) and recreation (+2.3% vs +3.6% in May). Easing price pressures for fuel more than offset a rise in electricity costs following the expiration of a reduced VAT rate, driving down transportation inflation. Meanwhile, consumer prices increased 3.2% in June, unchanged from the previous month's reading. Lastly, harmonized consumer prices rose 0.61% in June on a month-on-month basis, following a 0.09% rise in the previous month.

Panelist insight: On the next month’s inflation outlook, BBVA Research analysts commented: “Despite the downside surprises recorded up to June, headline inflation will rise again in July […] The partial withdrawal of tax breaks applied to energy and upward pressure on diesel prices will once again increase the contribution of the energy component to inflation.”

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